Biggest rise in house hunters for three years but property prices continue to fall, says RICS

Sliding: House prices have been falling for two years but activity is picking up say surveyors.

The biggest rise in house hunters for more than three years was recorded last month, as the property market started to show flickers of life, the latest Royal Institution of Chartered Surveyors report said

Improving mortgage rates and a slight boost to confidence delivered an upturn in property market activity in October, RICS members reported.

But house prices are falling in all regions except London and the South East and the capital’s property market has lost some of its head of steam.

RICs reported that its member agents had seen the biggest rise in new buyer enquiries since December 2009, with 18 per cent more reporting rising rather than falling enquiries, up from 5 per cent the previous month.

Meanwhile, home sellers are also testing the waters, with RICs reporting that 12 per cent more members reported a rise in new sales instructions compared to 5 per cent the month before.

The report said the risk to house prices and activity were easing, however, it was, ‘still far too early to call an end to the housing market stalemate.’

Ian Perry, of RICS, said: ‘The number
of potential buyers going out and viewing property saw a welcome boost
last month. It seems that with Christmas around the corner, those who
are in a position to buy decided to get out there and see what is
available.

‘That being
said, overall activity is still very low in most parts of the country
and what the market desperately needs is for this to translate into
actual sales.’

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House prices continued their more than two-year decline in the RICs report, with 7 per cent more members reporting a fall in property values rather than a rise. This was a marked improvement on the previous month, however, when 14 per cent more reported falling house prices.

ONS figures also released today, on the other hand, showed
prices inching up with a 1.7 per cent annual rise in September, despite
a 0.2 per cent monthly fall.

The mixed messages being delivered by the major property market reports reflect the struggle for direction and momentum.

This was highlighted in figures from the Council of Mortgage Lenders (CML) yesterday that showed despite better rates, mortgages for house purchases stood at 44,400 in September - down 18 per cent from August and 9 per cent annually. At the same time first-time buyer loans were down 13.5 per cent from the previous month and 3.2 per cent annually.

Out on their own: Only London and the South East saw house prices rise in the report.

The RICS report highlighted that London had ‘witnessed a marked downshift in momentum’ in recent months, and while a still relatively high 28% more members were reporting rising prices, this was down from 60% in March.

Mortgage rates have fallen in recent months, driven by the Bank of England’s Funding For Lending scheme pushing cheap money through banks and building societies to borrowers.

But estate agents warn that while potential buyers have seen a boost from this, there still remains a big gap between what people are willing to pay for property and stubbornly high asking prices.

A poll of agents by estate agent review website MeetMyAgent.co.uk showed that 43 per cent of agents cited this as the main problem in getting a property sold.

Russell Quirk, founder of low cost estate agent eMoov.co.uk, said: ‘A boost in buyer activity is a step in the right direction, but at the same time there needs to be more willingness on the side of the seller, to be more flexible when it come price.

‘If sellers are committed to a sale, then they should be willing to negotiate on price if a strong buyer, with finance already in place, makes an offer.’

Long way back: House prices have been falling for more than two years but the rate of decline is steadily easing.